This past Wednesday, it was revealed by Satya Nadella, the CEO of Microsoft, that the company is preparing to let go close to 10,000 employees over the course of the next few months as a means to drop costs because of the currently struggling economic climate.
These announced layoffs will cause issues for close to 5% of the software company’s total workforce, which currently sits at 122,000 domestic employees and over 99,000 employees internationally. The company officially confirmed the layoffs as part of a regulatory filing and a memo to staff members which had Nadella claim that the company would deal with these economic headwinds while further investing in new technologies.
“This is the context in which we as a company must strive to deliver results on an ongoing basis, while investing in our long-term opportunity,” Nadella explained to employees. “We will align our cost structure with our revenue and where we see customer demand … It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas.”
Shares for Microsoft were showing as flat throughout the first hour of trading this past Wednesday morning against a 0.5% increase within the S&P 500 and a 0.8% increase in the technology-heavy NASDAQ. Stock prices for the company dropped by close to 20% over the past year against a 12% decline in the former index and a 22% drop in the latter.
Nadella claimed that the company would “continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company while divesting in other areas.” He expressed that the development of artificial intelligence marks “the next major wave in computing” and claimed that the company is hard at work in its efforts to create platforms utilizing the world’s most advanced models.
Microsoft was forced to deal with a 14% drop in its net income throughout the first quarter of the fiscal year 2023 despite the fact that revenue went up by 11%, according to a recently released earnings report.
“In a world facing increasing headwinds, digital technology is the ultimate tailwind,” stated Nadella. “In this environment, we’re focused on helping our customers do more with less, while investing in secular growth areas and managing our cost structure in a disciplined way.”
Microsoft sits as one of the leading companies throughout the technology industry to bring about layoffs and hiring freezes last year.
